AI boom fuels efforts to make data centers more sustainable

Posted: March 21, 2025

Data centers keep sprouting up around the globe as companies jostle for leadership in artificial intelligence and other technologies that need vast processing power.  

Analysts now project that the largest players in the sector will invest some $1.8 trillion by 2030 to boost their computing power. That will fuel the meteoric rise of generative AI, as well as traditional database management and file storage—even your Netflix streaming.^[1]

But that growth has huge implications for the environment, from energy-related emissions to waste and water use. Here are some of the novel ways tech companies are trying to address sustainability.

Data centers’ energy use and greenhouse gas emissions 

More than anything, data centers burn through vast amounts of electricity. 

In the US, the International Energy Agency predicts their electricity use could already rise from roughly 4% of overall power demand in 2022 to between 6.7% and 12% by 2028.^[2] Globally, power demand from data centers could increase by as much as 165% by the end of the decade, according to Goldman Sachs.^[3]

That means the industry could produce about 2.5 billion tons of carbon dioxide-equivalent emissions through 2030—roughly double what a country the size of Indonesia emits in a year. 

To lower their carbon footprint, data center operators have been buying increasing amounts of renewable energy through so-called power purchase agreements. Rather than building physical wind and solar plants to power their operations, these deals typically involve financing an equivalent amount of green energy to offset the electricity they draw from the grid. 

In fact, Amazon, one of the hyperscalers that is driving data center growth, claims to be the biggest corporate buyer of renewable energy in the world, having backed more than 600 wind and solar projects to date. 

But bottlenecks in grid expansion and approvals for new renewable plants, as well as the inherent intermittency of wind and solar, mean some companies are starting to look for other solutions to satisfy their growing power needs. 

Microsoft will soon buy power from Three Mile Island, the nuclear plant in New York state that closed in 2019 but plans to restart one of its reactors on the back of a 20-year deal with the tech giant. And Google is one of several companies that want to use small nuclear reactors to power their data centers. Last year, it signed a deal with California-based Kairos Power, which is now constructing a demonstration reactor with a molten-salt cooling system in Tennessee.

“The grid needs new electricity sources to support AI technologies,” Michael Terrell, Google’s senior director for energy and climate, wrote in a blog post announcing the agreement. “Nuclear solutions offer a clean, round-the-clock power source that can help us reliably meet electricity demands with carbon-free energy every hour of every day.” 

It will take years before those reactors actually deliver power. In the meantime, fossil fuels have also gotten a boost from data center development: some utilities have grown more reluctant to close old facilities and are also building new natural gas-fired power plants to meet demand. 

Some companies, including Facebook parent Meta, hope to offset the impact by capturing the plants’ emissions and burying them underground—a relatively nascent technology that has not yet been deployed at the required scale. In the future, they also hope the plants can switch to burning renewable hydrogen instead. 

How data center operators are tackling water use and waste 

Emissions aren’t the only environmental concern when it comes to data centers. 

For one thing, cooling all those servers requires a lot of water. Virginia’s Data Center Alley west of Washington, DC—the largest data center hub in the US—used at least 1.85 billion gallons in 2023, an increase of almost two thirds from four years earlier. Google’s entire water consumption rose 14% that year, largely due to cooling needs at its data centers.^[4]

No wonder companies are looking to innovate in this area, too. One of the most eye-catching initiatives is Microsoft’s next generation of data centers, which the company says require no cooling water at all once they’re up and running. 

The key is a closed loop: once the cooling system is filled up, it keeps circulating water between the servers and chillers. The new system will launch in 2026 when new projects in Phoenix, Az., and Mt. Pleasant, Wis., come online. Microsoft says it’s also using more recycled water and, overall, has improved its water efficiency by 80% since its first data centers came online in the early 2000s.^[5]

Some operators are also looking at their waste products to improve their environmental footprint. More than a dozen data center operators in Stockholm, Sweden, now feed excess heat into the city’s district heating network—enough to keep 30,000 apartments warm through the Swedish winters. 

In the UK, tech startup Deep Green is similarly using energy from smaller data centers to heat public swimming pools. Installed on-site, the company’s smaller facilities also benefit in turn, by taking advantage of free cooling.

“If just 1% of the data center demand in the UK operated on our servers, we could deploy in every public pool in the country,” Deep Green founder and CEO Mark Bjornsgaard told The Guardian last year. Bjornsgaard says he’s also received interest from other potential partners, including district heating networks.

Somewhat ironically, tech firms are even using their data centers’ own computing power to optimize them—for example with AI-supported power management and smart cooling.  

^{[1] https://www.bcg.com/publications/2025/breaking-barriers-data-center-growth
[2] https://iea.blob.core.windows.net/assets/0f028d5f-26b1-47ca-ad2a-5ca3103d070a/Electricity2025.pdf
[3] https://www.goldmansachs.com/insights/articles/ai-to-drive-165-increase-in-data-center-power-demand-by-2030
[4] https://www.ft.com/content/1d468bd2-6712-4cdd-ac71-21e0ace2d048
[5] https://www.microsoft.com/en-us/microsoft-cloud/blog/2024/12/09/sustainable-by-design-next-generation-datacenters-consume-zero-water-for-cooling/}